Chinese e-commerce giant Alibaba on Thursday reported flat sales growth for the first time ever, as the country grapples with an economic slowdown and the resurgence of Covid-19 worries consumers.
Revenues for the April-June quarter totaled 205.6 billion yuan, beating analysts’ expectations although slightly below the same period last year, Alibaba said.
Alibaba’s performance is widely viewed as a gauge of Chinese consumer sentiment given its market dominance, and the company’s revenue growth has slowed significantly over the past year.
It is struggling with increased competition and the economic fallout from the tough Covid restrictions, which have hurt consumer sentiment, skyrocketed unemployment rates and disrupted supply chains.
“After a relatively slow April and May, June saw signs of recovery across all of our businesses,” Alibaba Group chairman and CEO Daniel Zhang said in a statement.
The company’s revenue growth was flat “mainly due to a decline in revenue in the China commerce segment,” although this was offset by growth in the cloud segment, Alibaba added.
Many parts of China had faced severe lockdowns in recent months as authorities scramble to stamp out the Omicron variant as part of the country’s zero-Covid policy.
Shanghai, China’s largest city and a major economic hub, has been in lockdown for two months due to Covid-related restrictions.
The company said that “restrictions in April and most of May led to supply chain and logistics disruptions” that hurt the performance of China’s retail sector, although demand picked up again in June during a popular shopping holiday.
Profit in the latest quarter was 22.8 billion yuan, up from 45.1 billion yuan a year earlier.
Aside from the coronavirus restrictions, Alibaba is also grappling with a crackdown on China’s tech giants by regulators.
In recent years, authorities have targeted alleged anti-competitive practices by some of China’s biggest names, fearing the big internet companies control too much data and are expanding too quickly.
Among other things, a planned IPO by Alibaba’s financial services provider Ant Group, which would have been the largest IPO in the world at the time, was canceled at the last minute.
The tech giant’s market value plummeted after Beijing launched a sweeping crackdown in 2020. However, according to the latest results, US-listed Alibaba shares are up 4.5 percent in premarket trading.
China’s economy grew just 0.4 percent in the second quarter of this year, the slowest growth since the coronavirus first broke out more than two years ago. (AFP)
This translated article originally appeared on FashionUnited.uk.